South Africa: Eskom Tariff Increase Endangers 200 000 Jobs – Expert

The total increase of 24.78%, which Eskom is now asking for, will endanger about 200 000 job opportunities at ferrochrome refineries, while the largest ferromanganese refineries in the country have already closed due to electricity tariffs.

Jurg Zaayman, chair of the Ferroalloys Producers Association of SA, on Tuesday presented data to the National Energy Regulator (Nersa), where Eskom’s application for the increase is being submitted to public hearing.

According to Zaayman about a further 900 jobs of people working in the manufacturing of silicon metals could be destroyed if Nersa approves Eskom’s application.

“Prior the cost of electricity was about 40% of the total cost and is now at just more than 50%. I fail to see how they can survive if the current application for a tariff increase is granted,” said Zaayman.

Brian Molefe, acting Eskom CEO, and Thava Govender, Eskom’s head of generation, stated clearly that the country will suffer more load shedding if Eskom does not obtain the increase it is asking for.

This is because Eskom needs most of the money from the increase to keep its diesel power generators going.

It costs about R2.35 per kilowatt hour to generate electricity with diesel generators as opposed to less than 50 cents per kilowatt hour to generate power at coal power stations. According to Molefe, load shedding, however, costs the country about R15 per kilowatt hour in electricity which is not provided.

The energy expert Chris Yelland said Eskom is dishonest in its presentation, because it does not reflect the cost savings it gets because its two new coal power stations – Medupi and Kusile – are late.

“According to Eskom’s last multi-year tariff application for the period from 2013 to 2017 it would by now have generated 4 300 megawatts of additional electricity. The cost of the generation of that electricity has been built into the current electricity tariffs,” Yelland said in a presentation to the Nersa panel.

“This should be deducted from Eskom’s application. When one does this, only 3.63% of the additional 12.61% Eskom is asking for diesel and additional power it wants to buy from private generators, remains.”

(Even before the application Eskom was entitled to increases of 12.69% in the 2015/2016 financial year.)